ABSTRACT The overall goal of this application is to develop a compelling rationale and workable methodology for the treatment of diffuse alveolar damage with transplanted human epithelial stem/progenitor cells capable of long term engraftment and improved organ function. Stem/progenitor replacement therapy is envisioned as a meaningful therapeutic adjunct in several clinical situations dominated by diffuse alveolar damage with epithelial loss: severe, acute lung injury, e.g. due to influenza or other causes of ARDS, as well as acute exacerbations of chronic fibrotic lung disease. Recent studies discussed in the application indicate effective alveolar regeneration, and thus improved lung function, requires both a first phase of expansion and migration of stem/progenitor cells to re-establish alveolar barriers followed by a second phase of differentiation of new barrier cells into mature type II (AEC2s) and type I alveolar cells. To develop a translational program for alveolar regeneration by transplantation of healthy lung epithelial stem/progenitor cells, three basic objectives are advanced: (1) Further delineation of the signaling programs by which endogenous human distal lung epithelial stem cells can be activated following major injury to establish new alveolar barriers and then differentiate to AEC2s. (2) In vitro development of pools of human distal (small airway and alveolar) epithelial stem cells, both endogenous and iPSC-derived, suitable for transplantation and directed differentiation in mice. Distal basal-like cells from human iPS cells using gene edited cells reporting surfactant protein C, cytokeratin 17 (Krt17), and NKX2.1 will be used to develop a workable protocol for directed differentiation after transplant. (3) Employ models of lung repair/regeneration approachable by transplantation as tools to assess the regenerative potential of human epithelial stem/progenitor cells. Macaque iPS cells suitable for transplantation into influenza-infected monkeys will be used as a primate model for therapy. It is anticipated that functional improvement in gas exchange and alveolar histology can be achieved in primates, providing both a rationale and methodology for stem/progenitor cells as adjunctive therapy after severe acute lung injury in humans.